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What is Password Sharing and Why are People Cracking Down?

Explore the implications of password sharing on business growth, revenue, and security, and discover strategies for converting unauthorized users into paying customers

Cayden Meyer
Cayden Meyer
Founder & CEO
February 2, 2024
What is Password Sharing and Why are People Cracking Down?

What is Password Sharing?

Password sharing occurs when individuals grant access to their personal or professional accounts to others who do not hold their own credentials. This practice spans across various digital platforms, from streaming services like Netflix to Software-as-a-Service (SaaS) applications used by businesses. Despite its commonality, password sharing raises significant concerns regarding security, privacy, and revenue loss for service providers.

Why Are Businesses “Cracking Down”?

Growth Challenges

Businesses are intensifying their efforts to curtail password sharing as a strategic response to stalling growth metrics. As the rate of new user acquisition slows, companies look to optimize revenue from their existing customer base. For example more than 50% of new revenue for large subscription businesses comes from existing customers. 

Revenue growth from existing customers can be achieved by encouraging upgrades to premium tiers, increasing prices, adjusting pricing strategies, or, crucially, by converting unauthorized users into paying customers.

Across the subscription businesses, you can see a number of these strategies being deployed over the last 12 months, from Spotify price rises to Netflix tackling password sharing

The Untapped Opportunity

Users who share passwords are a low-hanging fruit for businesses. They are already familiar with the service and understand its value, making the transition to paying customers more seamless. This untapped opportunity is not just about increasing revenue; it's about capitalizing on the ease of converting users who are already engaged and satisfied with the service.

For businesses that sell to other businesses, this can be a key signal to a land and expand opportunity, where they bring one user onboard from a company and expand across the company bringing more and more onboard. 

How Are Businesses Turning This into New Revenue?

Detecting Shared Usage

The first step is identifying the extent of password sharing. By understanding the scale of password sharing, companies can quantify the opportunity and strategize effectively.

There are a number of different ways to detect password sharing, from looking at devices, usage patterns to when and where usage occurs.

Taking Action

Once password sharing is detected, businesses can deploy various tactics to convert sharers into paying customers. This includes targeted marketing campaigns, personalized customer success outreach, and in-app promotions or warnings about account sharing policies. The goal is twofold: encourage users to create their individual accounts or, alternatively, establish a group account where the group administrator is charged on a per user basis. This approach not only increases revenue but also ensures compliance with usage policies, enhancing overall account security.

You can see some examples of the best practices for communicating with users who are account sharing here.

Companies are finding new avenues to grow their customer base and revenue. This focus on converting password sharers is not a crackdown; it's a strategic move towards sustainable business growth.

We at Upollo have been helping businesses detect account sharing and turn it into growth in a way which does alienate users or make it feel like a crackdown. 

We have helped detect and convert account sharers from individual users to Fortune 1000 companies. If your business is keen to know how much account sharing is going on or more specifically who is account sharing contact us we would love to help!

Read the Report: Upollo SOC 2 Type 1
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About the Author
Cayden Meyer
Cayden Meyer
Founder & CEO

On a mission to help millions of businesses understand their users and grow faster!

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